Nonprofit Do’s and Dont’s of Operating a Retail Establishment

Many nonprofits have found that it is easier for them to ask for donations of “stuff” rather than money!

In short, this article will hopefully help the nonprofit understand the do’s and don’ts of operating a retail establishment that in turn provides operational monies for the nonprofit.

Sadly, most nonprofits don’t understand the real value in receiving donated items and the potential for building a positive relationship with donors. Nonprofits know too well that donors, for the most part, are a resilient group and do forgive transgressions.

Likewise, I think many donors say in their mind: “Oh well, they are ‘just’ a nonprofit!” This in my opinion is toxic for the entire nonprofit arena and relegates the status nonprofit instead of raising the bar and having higher expectations which donors have the right to do!

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I am convinced that if nonprofits had really been doing their job in soliciting donated items there never would have been a http://www.freecycle.org/ website created!

People want to give… people are looking for ways to give…it is the nonprofit’s fault for not meeting the need.

Regardless of if you want to believe it or not, nonprofits are a BUSINESS!
The business you are in that of changing lives and in order to do that effectively you need money!

If your nonprofit has decided to run a retail store to to pay for your operations by selling used or unwanted items, then you need to be very honest in asking yourself, what do you really know about running a retail store?

Nonprofits appear to be one of the few groups that with great expectation and enthusiasm decide to open a business they know absolute nothing about.

It is true that nonprofits do have a an extreme advantage in being able to allow individuals to get rid of old stuff and get a tax deduction. But this magic really isn’t enough.

Nonprofits in many cases become the dumping ground for everything unless they quickly put in place guidelines for what they do and do not accept.

So, let’s begin this journey together….

Location, location and location! Nonprofits don’t have lots of money to go out and open a store in a high dollar retail location, but likewise you don’t want to open up a store in a section of town that where people feel is dangerous to be in either.

In most cases you have two specific groups you need to be thinking about i.e. your donors, meaning the ones that are going to give you stuff and second your shoppers. Sometimes these are the same people but many times they are not.

Is it clean, a safe location, well lighted at night time and easy to get to? Use common sense and remember that the retail experience begins even before you get to the parking lot! If you drive by a location and there are weeds growing up, broken glass in the parking lot, and paint chipping off the building, what are you thinking?

When you enter the door what do you see? The first impression is the most important one. Does someone greet you? Do you trip when you enter stepping over stuff? Do your eyes see a disorganized mess and do you smell a musty mildew odor?
Again, use common sense!

Walk to the right, please. In the US, shoppers tend to walk to the right if possible first and for whatever reason. So, if you are in the US, you want items that are easiest to sell as close as possible to the shopper. I realize that some retail outlets place the same items in the back of the store because they want to tempt you into buying other items. However, people that are shopping at a nonprofit store are looking for a real bargain and are not willing to make more effort than they have to. The easier you make it, the better.

How much is this? Please price all items. Also, spend the money for proper shelving or racks to display what you have to sell!

Sale, Sale, Sale! Let me ask you a question, would you rather sell one item for $10 or ten items for $1? I understand it is the same amount of money, but again, most people who are shopping in a store that sells “used stuff” expect and are looking to walk out with a bag full versus just one item.People are being conditioned daily to not just want, but demand, more for less.

A little sidebar: I never will forget the time I was in a Dollar Store and I heard a lady saying loudly to her friend a few aisles over. Come on, what do you expect, it is just a dollar.

Advertising? So, do you expect to only attract drive-by traffic or hope word of mouth is enough to create sales? What proactive things are you doing each month to create more sales?

Does your nonprofit store have a monthly drawing for store credit? After all, your cost of goods is zero since all the items are donated. Also, it could be advantageous to collect all those names and addresses and email addresses for all your shoppers to tell them about new store arrivals or alert them to special sales.

I hope by now you have a good idea of some of the positive things you can do to create not only sales for your nonprofit store but also help in building a presence in the community you serve. If you have any questions, feel free to email us!

DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.

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